Don’t Make the Mistake of Waiting Until It’s Too Late

Estate Planning may sound boring, but it’s essential!

A friend of mine died recently. He was older, without being “elderly.” That is, he was in great health and not even one bit frail. Still, I had been hounding him off and on for several years to get his estate in order “just in case.” He didn’t have a will or a trust prepared, nor even an Advance Healthcare Directive naming a trusted friend or family member as someone holding his power of attorney for healthcare matters. Not even a POLST, signed by his primary-care physician and lodged in the nearest hospital’s computer system for that inevitable day when he might be hospitalized, and the doctors and nurses would appreciate knowing—and not guessing at—his healthcare wishes. Not even as much as a handwritten letter of instructions stuck in his desk drawer.

Of course, there was always an excuse. “No time!” or “I’ll get around to it as soon as I can.” But he didn’t. He never did. And then that awful day suddenly arrived where he became ill and couldn’t even breathe. He was whisked away to the nearest hospital and placed into their care. Fortunately, as he was being wheeled into the ER, he pointed to a friend who had accompanied him to the hospital and shouted out in front of doctors and nurses, “He has my power of attorney!” Still, had he arrived at the hospital unconscious, it would have been a very different story.

That oral power of attorney worked well for those doctors and nurses who showed their integrity by honoring my friend’s verbal wishes so long as he remained under their specific care and in that hospital; but the hospital administration took a different view: Unless it’s in writing, no power of attorney is acceptable to them, which meant no access to his full medical records and no possibility of transferring him to another hospital because there was no clear, written power of attorney.

Now, of course, next of kin can make decisions about healthcare in the absence of written powers of attorney; however, in this case, the next of kin was his son, a minor. There were brothers and an ex-wife, but those were not the people my friend wanted making his healthcare decisions for him, and he himself was sedated and on a ventilator, unable to express any healthcare wishes for himself. The lack of clear directions, in writing, contributed greatly to his demise and the subsequent probate court mess that followed.

Life is much easier for everyone if there are clear designations of power of attorney and healthcare wishes. In this case, temporary confusion in the hospital between the holder of the oral power of attorney and one brother asserting his “next of kin” rights led to the hospital giving my friend two or three doses of a dangerous drug before the holder of the oral power of attorney reasserted control and stopped the treatment.

Just as important, with his intestate (i.e., no Will) death, all of my friend’s property must pass through probate court, with all of its attendant attorneys’ fees, court fees, executor fees, and business valuation and appraisal fees. Not to even mention that in his case, two competing probate petitions have been filed by next of kin, so there will now be court battles that soak up many thousands of dollars of his estate assets just to adjudicate who can proceed as the appropriate administrator of the estate!

Name Beneficiaries Now Wherever Possible

Much confusion and many subsequent problems can be avoided by simply naming beneficiaries whenever and wherever possible. And by doing so, the property (house, stocks, bank account, etc.) would typically transfer upon your death to your named beneficiaries outside of probate. This avoidance of probate for those financial accounts and properties with the beneficiaries you designated while still alive will make the entire transfer process after you are gone much easier, far less painful, and definitely cheaper. Plus, it’s easy for you to set up; so why not do this now?

  1. Real Estate. If you own real property, there are several ways you can avoid probate for your heirs when you die: You can have title to the property as “joint tenants with rights of survivorship” with another person or persons (usually one person, a spouse), who then automatically assumes sole ownership of the property upon your death. Or, you can create a Living Trust that covers the real and other property that you own, so that it goes to your named beneficiaries. Or, you can very easily keep your house outside of probate with a Transfer On Death (TOD) deed. Nearly 30 States make provision for filing TOD deeds, and they are simple to fill out and file with the County Recorder where your property is located.

As of 2021, the District of Columbia and the following States have laws that authorize TOD deeds or affidavits: Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Maine, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio (affidavit), Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. There are another five States (Florida, Michigan, Texas, Vermont, and West Virginia) that recognize an “enhanced life estate deed,” which operates in a manner similar to a TOD deed but transfers ownership while you are still alive, with you retaining the right to still live in your house. The drawback to an enhanced life estate deed, of course, is if your assets ever need to be liquidated for your long-term-care expenses, then this property would not be available to help you.

The advantages of a TOD deed are that it: (1) is easier and less expensive to prepare than a Living Trust; (2) allows you to maintain full control over your property while you are still living, unlike a joint-ownership deed; (3) doesn’t pass through probate like real property named in a will, thereby potentially saving many thousands of dollars; (4) offers retention of asset protection and taxation benefits for a principal residence in many States, which might be lost with other types of ownership transfers; and (5) is not an immediate transfer so no Federal gift tax is owed. (Please note that if your property is not located in a State that recognizes TOD deeds, you may still be able to avoid its probate by transferring your property to a Living Trust instead. But Living Trusts deserve a separate article to themselves and are not discussed here.)

Upon the death of the TOD deed holder, all that the beneficiary named in the deed must do is present himself or herself at the County Recorder’s office along with appropriate identification and the death certificate. The deed is then signed over to the beneficiary. Recording fees vary from one State to the next but are usually not high.

  1. Bank and Stockbroker Accounts. Make sure that you have named a beneficiary at all of your bank and stockbroker accounts. This process is also easy, can often be done online, and, upon your death, allows your designated beneficiary to go to the bank and stockbroker with your death certificate and their identification card to transfer the account directly into their name without the need for passing through probate.

Name Your Agents Now

My mother had a Will drafted long ago. I looked at it and even nearly 60 years later it was still valid and covered all of the bases. She had named her sister (my aunt) as the executrix in the Will, but one thing she had not done was name the person (or institution) who would make her medical and legal decisions when she was no longer able or competent to do so. I took care of that and so should you, for yourself and your loved ones.

  1. Advance Healthcare Directive. An advance healthcare directive is a legal form document in which you designate one or more persons to make your healthcare decisions for you within (or without) the confines of your general medical wishes once you are no longer able to make decisions for yourself because of illness or incapacity. In the directive, you can express your wishes as to the degree of medical care that you want, the medical treatments that you would accept or reject, and whether you prefer to die at home or in the hospital should it come to that dire situation. As you sign this form, it must either be notarized or signed by two witnesses. Copies should be provided to your doctors and nearest or most-likely-to-be-used hospital. Consult with your own estate-planning attorney as I cannot vouch for any of the online forms, but one online advance healthcare directive form can be downloaded from www.formfindr.com.
  2. Durable Power of Attorney. A durable power of attorney (POA) authorizes another person—selected by you in that POA—to make legal and financial decisions for you when you are no longer able to do so. It is extremely important, as you can well imagine, to very carefully select the right person to exercise this power and to designate another such trustworthy individual to act in his or her place if something should happen to your first-named agent. You will most likely want your POA to take effect only if you are incapacitated.

State Your Intentions Now

Letting your intentions be known now, while you are still alive and able to do so, may be one of the most important
estate-planning steps you can take. Your intentions should be stated both in writing and verbally so as to avoid confusion.

  1. POLST. A Physician Order for Life-Sustaining Treatment (POLST) is a simple form that you fill out and have counter-signed by your primary care physician. It basically states in clear written words your wishes as to whether you want to be resuscitated or not resuscitated in the event you have no pulse and are not breathing. It also states your wishes for medical interventions (full treatment, selective treatment, or comfort-
    focused treatment) and artificially administered nutrition (use of feeding tubes or not). Once completed and signed by both you and your physician, this form is then scanned into the computer system of both your physician as well as the nearest hospital that you are most likely to be taken to in the event of a medical emergency. In this way, no time is lost with doctors or hospitals trying to guess your wishes or reaching out to your family members and quizzing them about what they might know of your medical wishes. The POLST does not need to be witnessed or notarized, but it must be signed by you and your doctor.
  2. Funeral Planning Declaration. This declaration states your wishes for how your remains are to be handled (cremation or burial) and what funeral or memorial services, if any, are to be held for you. Forms for this declaration can be easily found online. You must, however, designate a person to carry out your wishes and the declaration must either be notarized or signed by two witnesses. It is highly advisable to give copies of this declaration to both your designated person and the funeral home you have selected.
  3. The Toughest Part. Talk with your loved ones about your wishes and explain why you made the choices you did. There are bound to be hurt feelings, but while alive you have a much better chance to soothe those feelings and head off any post-mortem family clashes. You can also use this opportunity to tell them exactly where to find your Will and other documents so that when they need them the most, they won’t be scrambling around searching for these important papers expressing your wishes. On the other hand, don’t be naïve either and tell the excluded family member where all of your important documents are so that he or she may get to them first and destroy them!

Last But Not Least

Make sure that you have a Last Will and Testament prepared, signed, dated, and properly witnessed (if not holographic, i.e., handwritten), which designates an executor and to whom your property, both real and personal, should go. It is best for you to have a qualified attorney prepare your Will for you; but keep in mind that if you have already created and recorded a TOD deed, or otherwise designated beneficiaries as mentioned above, then those assets would not typically be mentioned in your Will as they pass outside of probate. Give a copy of your Will to your named executor in advance of death so that the executor can take action without delay.

Please also make a list of all of your banks and account numbers, all investment institutions with account numbers, credit cards, insurance policies, and even your utility accounts, so that they can be easily found and dealt with by your heirs. For ongoing bills, it would also be wise to leave clear instructions as to how and when these bills are paid.

“The readiness is all …”

In Act V, scene ii of Hamlet, Hamlet responds to Horatio in a most-memorable part with the famous observation that “the readiness is all.” After having suffered so many setbacks in his life, Hamlet seems to finally recognize that the best we can do is to prepare oneself for what is to come. So, I urge you all to prepare now for the inevitable.

This article is not intended as specific legal advice for anyone, but rather is a general overview of this very unpopular-to-talk-about topic that can start a conversation between you and your attorney and also among you and your family or other heirs. State laws vary in this matter, and it is important to create documents that are specific to your State and are valid there. In all cases, you are best advised to at least consult with a local attorney familiar with probate and estate law. In some cases, online forms may be sufficient, and I have seen some very good ones out there for creating Wills and even trusts. But, a little money and time expended now to take care of this very important matter can make life much easier for those you love and left behind. WF